Question

Solomon Manufacturing Company was started on January 1, 2018, when it acquired $80,000 cash by issuing common stock. Solomon immediately purchased office furniture and manufacturing equipment costing $9,100 and $33,100, respectively. The office furniture had an eight-year useful life and a zero salvage value. The manufacturing equipment had a $3,500 salvage value and an expected useful life of four years. The company paid $11,300 for salaries of administrative personnel and $15,600 for wages to production personnel. Finally, the company paid $13,000 for raw materials that were used to make inventory. All inventory was started and completed during the year. Solomon completed production on 4,800 units of product and sold 3,880 units at a price of $15 each in 2018. (Assume that all transactions are cash transactions and that product costs are computed in accordance with GAAP.)

Required

1. Determine the total product cost and the average cost per unit of the inventory produced in 2018. (Round "Average cost per unit" to 2 decimal places.)

2. Determine the amount of cost of goods sold that would appear on the 2018 income statement. (Do not round intermediate calculations.)

3. Determine the amount of the ending inventory balance that would appear on the December 31, 2018, balance sheet. (Do not round intermediate calculations.)

4. Determine the amount of net income that would appear on the 2018 income statement. (Round your answer to the nearest dollar amount.)

5. Determine the amount of retained earnings that would appear on the December 31, 2018, balance sheet. (Round your answer to the nearest dollar amount.)

6. Determine the amount of total assets that would appear on the December 31, 2018, balance sheet. (Round your answer to the nearest dollar amount.)

Answer 1

a)

Raw material used	13000
Wages to production personnel	15600
Depreciation on manufacturing equipment	7400
Total product cost	36000
number of units produced	4800
average cost per unit of the inventory produced	36000/4800=$ 7.5 per unit

#Depreciation on manufacturing equipment =[cost-salvage value]/useful life

                 = [33100-3500]/4

                 = 7400

2) amount of cost of goods sold = units sold *average cost

                    = 3880 *7.5

                    = $ 29100

3)units in ending inventory = 4800-3880 = 920 units

amount of the ending inventory balance =Ending inventory * average cost

                                   = 920*7.5

                                    = 6900

4)

sales (3880*15)	58200
less:expense
cost of goods sold	29100
salaries of administrative personnel	11300
Depreciation on office furniture [9100/8]	1137.5
Total cost	41537.5
net income	16662.5 (rounded to 16663)

5) amount of retained earnings =Beginning balance+net income -dividend

                = 0 +16663 -0

               = 16663